Thursday, April 28, 2016
One difficult situation that a financial adviser might face is watching a client pass away and then seeing the beneficiaries of the estate undo years of financial planning. This article discusses why it is important for advisers to establish relationships with their client’s beneficiaries. Estate planning involves more than just the transfer of money or management of assets. It involves personal connections with clients and beneficiaries. In this column the author recounts his own experience with losing an account after a client passed away. He discusses some of the changes he made to the way he does business after his experience with losing business. Building relationships with beneficiaries is a good way to promote the long term success of an adviser.
See Scott Huff, Rethinking Estate Planning as Building Beneficiary Relationships, Wealth Management, April 27, 2016.
Tuesday, April 19, 2016
There are many CPAs who get involved with estate planning for clients who have interests in one or more limited liability companies (LLCs). This article discusses many of the things that CPAs should know when they get involved with helping clients who have LLCs. It explains some of the real-world problems that often come up with LLC operating agreements. Oftentimes there are mistakes with the titling of assets, which can be bad news for clients who have creditor rights problems. This article also goes into discussing the new IRS disclosure rules as they relate to Form 8971 and when it must be filed with the IRS. CPAs need to be aware of this information and how it will impact their practice. Staying informed about the new regulations will help CPAs better protect their client’s interests and avoid getting in trouble.
See Seymour Goldberg, What CPAs Should Know about Pass-Through Entities and IRS Form 8971, Accounting Today, April 15, 2016.
Special thanks to Seymour Goldberg (Goldberg & Goldberg, P.C.) for bringing this article to my attention.
Tuesday, April 12, 2016
One of the biggest news stories in the last year was the story of Ethan Couch, the son of a millionaire who claimed being from an affluent family that set no rules lead to his fatal car crash. When faced with a probation violation, he fled to Mexico but was later caught after using his cell phone to order a pizza in a stunning example of someone having no clue about how digital actions can easily be monitored. And he is not the only rich kid with that problem. A growing number of parents are being called out for their own misdeeds, particularly fraud and tax evasion, after their children post pictures and comments on social network sites. One fraudster was caught after his adult son posted a picture of the two standing in front of a private plan despite the fact he had stated he was broke. And it's not just the affluent unknowns making this mistake, rapper 50 Cent faced tough questions from a bankruptcy court after posing with stacks of $100 bills spelling out the work "broke" in a Facebook post. What everyone needs to remember in the digital age is that nothing you post online will stay hidden, or forgotten, for long.
See Sarah Knapton, Super-rich caught out by children’s Instagram accounts, The Telegraph, April 3, 2016.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
Friday, April 8, 2016
This column discusses an article that was written by Elaine Mcardle discussing the need for law firms, lawyers, and recent graduates to adapt to changing technology. Lawyers are facing increasing digitization and outsourcing, which is analogous to the situation of taxi drivers being replaced by Uber. Legal professionals will need to figure out how to adapt to this changing reality. This article discusses some of the programs that are in place to help guide legal professionals through these rapid changes in technology. “A program recently created by Michele DeStefano of the University of Miami Law called LawWithoutWalls is meant to foster innovation in the legal profession.” Attorneys who want to adapt and stay ahead should stay informed about the constant changes in legal technology.
See Pooja Shivaprasad, The Laws of Adaptation, Wealth Strategies Journal, April 1, 2016.
Special thanks to Jim Hillhouse for bringing this article to my attention.
Wednesday, March 23, 2016
Catherine A. Schraegle (J.D. Candidate, Texas Tech University School of Law) recently published an article entitled Keeping It Away From the Family: Defending Baby Boomers’ Financial Interests From Their Own Children Breaching Fiduciary Duty in the Fall 2015 issue of the Estate Planning & Community Property Law Journal published by the Texas Tech University School of Law. Below is an abstract of her article:
The generation born after World War II is collectively known as the “baby boomer generation.” In 2030, all of the baby boomers will be at least 65 years of age, and more than twenty percent of the United States population will be 65 years of age or older. As the baby boomers age, any of them will become dependent—in some way or another—on their children, spouses, or caregivers. Unfortunately, elder abuse, which “includes physical, sexual, or psychological abuse, as well as neglect, abandonment, and financial exploitation[,]“ is becoming more and more prevalent in society. Elder abuse is more than just a tragedy that occurs in nursing homes or assisted living facilities. In fact, “[o]ne out of every ten people ages 60 and older who live at home suffers abuse, neglect, or exploitation.” Financial exploitation is just as important as any other form of abuse that an elderly person may suffer. It is not uncommon to hear about children taking advantage of their parents’ estates, whether a court has legally appointed the children to regulate their finances or an implied financial duty exists. According to a study conducted by the American Association of Retired Persons, “60 percent of adult protective services (APS) cases of financial [elder] abuse nationwide involved an adult child of the elderly person.” This comment will discuss the steps estate planners can take to prevent their clients’ children from taking financial advantage of their clients.
Wednesday, March 16, 2016
Financial abuse of the elderly is a growing epidemic in the United States. There are many instances of financial elder abuse that go unreported, and this problem is only going to get worse as the elderly population continues to increase. This article discusses some of the signs of financial elder abuse that financial advisers should look out for so that they can properly alert their clients to the situation. There is an important list of questions this article discusses that the client should be asked to make sure they have a proper handle on their financial affairs. It is important to keep good records and that trusted responsible people are prepared to take over important fiduciary positions in the event the client passes away or become incapacitated. Financial advisers need to be on the front lines in confronting the growing problem of elder financial abuse.
See Roger Wohlner, How to Help Clients Fight Financial Elder Abuse, Investopedia, March 16, 2016.
Tuesday, March 15, 2016
A study that was conducted by the University of Chicago and University of Minnesota has revealed some shocking things about broker misconduct. The study called “The Market for Financial Adviser Misconduct” found that broker misconduct is common in counties that have a high concentration wealthy elderly people. The researchers “reviewed disciplinary records over a 10 year period, covering about 640,000 brokers in almost 4000 securities firms, according to an On Wall Street article from March 2, 2016.” This article discusses some of the steps that people can take to research their brokers. There are resources available that people can use to obtain information. It is important to carefully research brokers and financial advisers ahead of time. Sometimes it might not be a bad idea to get a second opinion.
See Carolyn Rosenblatt, What Your Aging Parent’s Broker Isn’t Telling You, Forbes, March 15, 2016.
Friday, March 11, 2016
One thing that has become common in the retirement plan industry are lawsuits regarding fees charged in 401(k) plans. Many fiduciaries assume that they can alleviate the risks of lawsuits by using low-cost or index strategies. This article mentions ERISA as an example of a plan where fiduciaries must make investment decisions based solely on the needs of the plan’s beneficiaries. When fiduciaries make investments they must act "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims." Fiduciaries of 401(k) plans have an obligation to provide the best service possible to the beneficiaries of the plan.
See Manning & Napier, Collective Investment Trusts: A Fiduciary Opportunity, Seeking Alpha, March 11, 2016.
There are many instances in business when a person will want to share confidential information with another party, but to do this safely often requires a non-disclosure agreement. This article discusses some of the key terms that a non-disclosure agreement (also known as a “confidentiality agreement”) must include. It makes sense to have a confidentiality agreement when a business person wants to convey information to another business person without the risk of having that information stolen or used without approval. The two basic formats of a non-disclosure agreement are a mutual agreement or a one-sided agreement. This article examines and explains the key elements of a non-disclosure agreement. It also takes a look at some of the additional provisions that can help to strengthen a non-disclosure agreement.
See Richard Harroch, The Key Elements Of Non-Disclosure Agreements, Forbes, March 10, 2016.
Tuesday, March 8, 2016
When a person is creating a trust it is critical to select the right trustee. Appointing a family member for the position is not always a good idea and it is often better to appoint a third party to serve in the position of trustee. This article discusses the important qualifications that a person needs when taking on the fiduciary responsibilities of the role of trustee. Trustees will need to perform many different tasks and it is important for them to have strong administrative skills. They should also have investment knowledge as well as tax and accounting skills. It is also extremely important for a trustee to be aware of his or her own limitations and to seek out professional help when they need it. Trustees have many fiduciary responsibilities and having personal integrity is a must.
See Walt Zaremba, Trustees Have the Keys to Your Kingdom, Daily Press, March 8, 2016.